23 Jun What is a paid up and what are my paid up options?

What is a paid up and what are my paid up options?

A paid up is an old workplace pension that you are no longer paying into. If you’ve changed jobs a few times, and haven’t thought about combining your pensions, it’s likely you’ll have a few paid up. Some of these inactive pensions could be subject to hefty fees, so it might be wise to track them down.

With 2017 research finding that up to a fifth of British adults have lost track of multiple paid up, it’s more important than ever to keep track of your savings. Not only will you get peace of mind that you’ve saved enough for a comfortable retirement, you’ll also have sight of how your savings are performing and what fees you’re being charged.

With a little investigation and clever planning, there are several things you can do to get your paid up back on track.

Track down paid up

The first thing you’ll need to do is track down all your old workplace pension. If you don’t have all the information saved, there are several ways you can locate the details of your old pension providers.

If you contact your former workplace, the HR department should be able to provide you with details of the company plan. It will then be up to you to contact the provider directly to find out the value of your pension.

If you have several paid up, it may save time to use the government’s free pension tracing service to locate them. This is a searchable database that allows you to input your former employer’s name or pension provider to find the information you require. You can use this service online or by telephone.

paid up options

When you’ve located a paid up, there are several things you can do with it.

• Transfer your pension: if you have several paid up, you may choose to combine your pots and transfer them all into your current pension.
• Create a new pension: personal pensions are independent from workplace pension and anyone can set one up. With a personal pension, you’ll get to choose your pension provider and the scheme that’s best suited to your needs.
• Purchase an annuity: buying an annuity will help you secure a guaranteed income for a fixed period, whether that’s a few years or the rest of your life. You can purchase an annuity from the age of 55.
• Drawdown: drawdown is the main alternative to purchasing an annuity and enables you to keep your pension invested until you need it. You need to be aged 55 or over to begin using drawdown.

Beware of hidden charges on paid up

Once you have sight of your paid up you should check the values and examine your pensions carefully.

It’s not uncommon to think that while your pension is frozen it will be ticking over and growing, but this isn’t always the case.

Every provider imposes pension charges of some description, and these can have an impact on your savings. These may include an annual management fee (which covers your provider’s admin costs) and exit fees (which are triggered the moment you withdraw or transfer your pension).

Other fees can also be charged on paid up which, over time, can chip away at your savings.

By its very nature a paid up is inactive, yet some providers will charge an inactivity fee. This means that if you fail to make contributions over a set period of time you can be penalised.

Service fees, policy fees and underlying fund fees may also be charged. So it’s well worth learning about the range of pension charges you could be paying and checking your plan’s small print.

Combine your pensions

Once you’ve located all of your paid up it can be a good idea to unite them in one single pot. Combining can be one of the best ways to keep track of all your pensions and reduce the amount of fees you pay.

Neo FP can help you combine and transfer all of your paid up into one simple plan. This will make it easier to manage your pension and help you track the income you can expect to receive in retirement.